STATE OF NEW MEXICO; STATE
OF CALIFORNIA; STATE OF
GEORGIA; STATE OF HAWAII;
STATE OF KANSAS; STATE OF
MARYLAND; STATE OF
MONTANA; STATE OF NEVADA;
STATE OF NORTH CAROLINA;
STATE OF TENNESSEE; STATE OF
UTAH; STATE OF WEST
VIRGINIA,

In recent years society has begun to recognize smoking as an important
public-health issue. The historic 1998 agreement between most of the states and
the major tobacco companies was a milestone in the ongoing attempt to address
this issue. As part of a broad settlement of the states' claims, the tobacco
companies agreed to pay over time hundreds of billions of dollars to the states.
In view of the enormous amount of money at stake, it is perhaps not surprising
that there has been considerable controversy about the status of the settlement
funds.

In this case, a recipient of Medicaid benefits for smoking-related illnesses
seeks a share of the settlement funds. He argues that when he applied for
Medicaid benefits from Colorado, he assigned to the state his right to sue the
tobacco companies for the injuries he has suffered from their products. He
asserts that the state's comprehensive settlement covered his individual claims,
and that under federal Medicaid law, after the state has reimbursed itself for the
benefits it has paid out it must then turn over the excess funds attributed to the
Medicaid settlement to the individuals whose claims were settled.

Contrary to a number of district courts that have considered similar cases,
we hold that this suit is not barred by the Eleventh Amendment. It seeks
prospective relief for an alleged ongoing violation of federal law, and the
requested relief does not implicate special sovereignty interests. On the merits,
however, we find the suit foreclosed by a recent federal law amending the
Medicaid statute. We hold that this law, passed in response to similar
controversy over the federal government's right to control part of the tobacco
settlement funds, releases the state from having to reimburse individual Medicaid
recipients. We therefore affirm the district court's dismissal of the complaint in
this case.

BACKGROUND

Medicaid is a cooperative federal-state program that provides medical
services to those without resources to pay for them. See generally 42 U.S.C.
§§ 1396-1396u. The federal government provides funding to a state's
Medicaid
program if it meets various statutory and regulatory requirements. At issue in
this case is the requirement that the state condition eligibility for Medicaid
benefits on recipients' assigning to the state any claims they have "to support . . .
and to payment for medical care from any third party." § 1396k(a)(1)(A). The
state's program must also provide that when a third party is found to be legally
liable for the costs of a recipient's medical care, the state will seek
reimbursement "to the extent of such legal liability," so long as the amount the
state can reasonably expect to recover exceeds the costs of recovery. §
1396a(25)(B). Part of any money the state collects under this assignment

shall be retained by the State as is necessary to reimburse it for
medical assistance payments made on behalf of an individual with
respect to whom such assignment was executed (with appropriate
reimbursement of the Federal Government to the extent of its
participation in the financing of such medical assistance), and the
remainder of such amount collected shall be paid to such individual.

§ 1396k(b) (emphasis added). Colorado administers a Medicaid program and
requires that an applicant assign to the state "all rights the applicant may have to
medical support or payments for medical expenses from any other person." Colo.
Rev. Stat. § 26-4-106(4).

In 1997, Colorado sued several major tobacco companies in Colorado state
court for a number of violations of state law related to the manufacturing and
marketing of tobacco products such as cigarettes, including false representations,
restraint of trade, and racketeering. Although the complaint did not set forth a
separate cause of action under Medicaid law, it requested (among other relief)
damages (including treble damages) "in the amount of increased health care costs
paid by the State," including "increased Medicaid payments."

In 1998, Colorado and most other states settled their lawsuits with the
tobacco companies in what is called the "Master Settlement Agreement." It
released the companies from past, present, and future claims by Colorado,
including all health-related claims. The settlement required the tobacco
companies to comply with various conditions, such as limitations on advertising.
It also required the companies to make regular payments into an escrow fund, the
amounts of which are subject to adjustment as market conditions change. Once
the settlement agreement was finalized through a consent decree, Colorado
became entitled to a share (about 1.37%) of these funds. The complaint estimates
Colorado's share over the next 25 years at about $2.6 billion.

Wilfred Harris is a recipient of Colorado's Medicaid program who has
been treated for smoking-related illnesses.(1)
He filed this action under 42 U.S.C.
§ 1983, alleging that (1) he assigned his right to sue the tobacco companies to
Colorado; (2) Colorado settled his individual claims against the tobacco
companies in its broad release in the Master Settlement Agreement; (3) part of
the settlement funds therefore are subject to the distribution requirements of
§ 1396k(b); and consequently (4) he is entitled to some portion of the funds once
the state reimburses itself for its Medicaid expenses.(2) The complaint asked for
declaratory and injunctive relief against Governor Bill Owens and Jim Rizzuto,
Executive Director of the Colorado Department of Health Care Policy and
Financing. In particular, Harris sought to enjoin Defendants from depositing the
settlement funds into the state treasury until entitlement to the funds was resolved.

Defendants moved to dismiss for lack of subject-matter jurisdiction due to
Eleventh Amendment sovereign immunity and failure to state a claim upon which
relief can be granted. A magistrate judge recommended dismissing on both
grounds. Over Harris's objection, the district court dismissed the case on both
grounds.

Putting aside for a moment the Eleventh Amendment issue discussed
below, the district court had jurisdiction under 28 U.S.C. § 1331. We have
jurisdiction under 28 U.S.C. § 1291. We review de novo the district court's
decision to dismiss this case on Eleventh Amendment grounds and for failure to
state a claim. Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226,
1236 (10th Cir. 1999) (failure to state a claim); ANR Pipeline Co. v. Lafaver,
150 F.3d 1178, 1186 (10th Cir. 1998) (Eleventh Amendment). On a motion to
dismiss for failure to state a claim, we accept all well-pleaded allegations as true
and view them in the light most favorable to the non-moving party. Sutton, 173
F.3d at 1236.

B. Order of Issues

We first address the threshold question whether we must decide the
Eleventh Amendment issue before we reach the merits of this case. In similar
cases in other states, two federal courts have bypassed the Eleventh Amendment
and dismissed on the merits. SeeFloyd v. Thompson, 227 F.3d 1029, 1034-35
(7th Cir. 2000); Strawser v. Lawton, 126 F. Supp. 2d 994, 999-1000 (S.D. W.
Va. 2001). Although we agree with the Seventh Circuit that the merits of this
case are more easily resolved than is the Eleventh Amendment issue, seeFloyd,
227 F.3d at 1034-35, we are compelled by our precedent to decide the Eleventh
Amendment issue first. SeeMartin v. Kansas, 190 F.3d 1120, 1126 (10th Cir.
1999) ("Because the State's assertion of Eleventh Amendment immunity
challenges the subject matter jurisdiction of the district court, the issue must be
resolved before a court may address the merits of Martin's underlying ADA
claim."), overruled on other grounds byBd. of Trustees of the Univ. of Ala. v.
Garrett, 531 U.S. 356 (2001). Once effectively raised, the Eleventh Amendment
becomes a limitation on our subject-matter jurisdiction, and we may not then
assume "hypothetical jurisdiction" to reject a plaintiff's claim on the merits. Id.;
cf.Fent v. Okla. Water Res. Bd., 235 F.3d 553, 558-59 (10th Cir. 2000)
(holding
that a proper Eleventh Amendment challenge strips the courts of jurisdiction for
the purposes of the removal statute, 28 U.S.C. § 1447(c)).

Some statutory questions are both logically antecedent to and similar in
scope to the Eleventh Amendment inquiry. In those circumstances, it is
appropriate for us to address the statutory question first. For example, the
Supreme Court has held that we can address whether a statute permits a suit
against the state before deciding the Eleventh Amendment question. Vt. Agency
of Natural Res. v. United States, 529 U.S. 765, 779-80 (2000). Defendants do
not dispute that they can be sued under 42 U.S.C. § 1983.(3)

Unlike the question whether a statute authorizes a suit against a state, the
question whether the suit states a claim upon which relief can be granted is
neither logically antecedent to nor coincident in scope with the Eleventh
Amendment inquiry. Cf.Vt. Agency, 529 U.S. at 779 (distinguishing between
whether the statute authorizes a suit against the state and the broader questions
whether it authorizes a private cause of action at all or whether the complaint
states a claim). Though it is generally our practice to avoid difficult
constitutional questions when a case can be resolved on simpler statutory
grounds, we decline to follow the Seventh Circuit's Floyd v. Thompson.

In Strawser, the district court partly circumvented the Eleventh
Amendment analysis in a somewhat different manner. The court concluded that
because the plaintiffs' claim failed on the merits, there was no ongoing violation
of federal law, and so the Ex parte Young exception to sovereign immunity was
inapplicable. Id. at 1000. We have held, however, that at this stage, the question
is not whether the state officials "actually violated federal law"; rather, it is
whether the plaintiffs have stated a "non-frivolous, substantial claim for relief"
under federal law. Elephant Butte Irrigation Dist. v. Dep't of Interior, 160 F.3d
602, 610 (10th Cir. 1998). This is congruent with our practice under 28 U.S.C.
§ 1331, the statute conferring federal-question jurisdiction: If the federal claim
is not wholly frivolous, it suffices to establish federal jurisdiction even if it
ultimately is rejected on the merits. Martinez v. United States Olympic Comm.,
802 F.2d 1275, 1280-81 (10th Cir. 1986). Harris has alleged a violation of 42
U.S.C. § 1396k(b), which states that the state "shall" reimburse itself and the
federal government for Medicaid expenses and pay the remainder to the Medicaid
recipient. While we ultimately reject Harris's claim on the merits, it should not
be characterized as frivolous. Cf.Brown v. State, 617 N.W.2d 421, 427-28
(Minn. App. 2000) (upholding the dismissal of a similar lawsuit but reversing the
district court's award of sanctions against the plaintiffs' attorneys), cert. denied,
Brown v. Minnesota, 121 S.Ct. 1655 (2001). Indeed, the Congressional Record
reports that three states (Florida, Louisiana, and Massachusetts) treated their
settlement with the Liggett Corporation, a tobacco company, as Medicaid
settlements and reimbursed the federal government for its share of costs. 145
Cong. Rec. S2831 (daily ed. Mar. 17, 1999) (statement of Sen. Specter). If this
settlement was treated as including Medicaid settlements under § 1396k(b), it is
not unreasonable for Harris to argue that the Master Settlement Agreement is also
subject to § 1396k(b). We therefore decline to follow Strawser.

C. Sovereign Immunity

The Eleventh Amendment states, "The Judicial power of the United States
shall not be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another State, or by
Citizens or Subjects of any Foreign State." Because the Amendment "stands not
so much for what it says, but for the presupposition which it confirms," it has
been interpreted much more broadly than its text would suggest. ANR Pipeline,
150 F.3d at 1187 (quotation marks and alterations omitted). Among other things,
it generally bars suits brought by individuals against state officials acting in their
official capacities. Elephant Butte, 160 F.3d at 607. This bar does not apply,
however, if the state waives its sovereign immunity, if Congress validly abrogates
the state's immunity, or if the suit falls within the legal fiction of Ex parte
Young, 209 U.S. 123 (1908). ANR Pipeline, 150 F.3d at 1187-88. Harris argues
only that this case falls within the Ex parte Young doctrine. A suit within the Ex
parte Young doctrine is not considered a suit against the state; rather, it is a suit
against individual state officers who are stripped of their official character.
Elephant Butte, 160 F.3d at 607-08.

For the purposes of this case, the relevant features of the Ex parte Young
doctrine can be summarized as follows: The Eleventh Amendment does not bar a
suit against state officials in their official capacities if it seeks prospective relief
for the officials' ongoing violation of federal law. See generallyElephant
Butte,
160 F.3d at 607-09; ANR Pipeline, 150 F.3d at 1188-89. Even if these
requirements are met, the suit will be barred either if the relief requested
"implicates special sovereignty interests" and is the "functional equivalent" of
relief that would otherwise be barred; or in cases involving only statutory rights,
if Congress has prescribed a "detailed remedial scheme" for enforcing the right
against a state. ANR Pipeline, 150 F.3d at 1189-90. Defendants do not contend
that Congress has created a detailed remedial scheme to supplant Ex parte Young
in this case, so we consider only whether this suit seeks prospective relief for an
ongoing violation of federal law and whether the requested relief implicates
special sovereignty interests and would otherwise be barred.

1. Defendants' Authority

Defendants argue that they lack authority under Colorado law to pay any
portion of the settlement funds to Harris. In particular, citing Sections 32 and 33
of Article V of the Colorado Constitution, they argue that state funds can be
disbursed from the treasury only through an appropriations bill passed by the
state legislature. If they lack authority to provide the relief Harris seeks, they
argue, they are not acting in violation of federal law and cannot be enjoined
under Ex parte Young.

This contention is irrelevant in this case. Defendants misconstrue the
nature of the relief Harris seeks. Harris seeks a declaratory judgment that once
the state reimburses itself for its Medicaid expenses, he is entitled to a portion of
the tobacco settlement funds that are to be paid to the state, and an injunction
preventing the state from depositing these funds into the state treasury until the
court determines what amount is due to the smokers. The money Harris seeks has
not yet been paid into the state treasury. Since "the state cannot 'authorize' the
officials to violate federal law," Elephant Butte, 160 F.3d at 610, if some of the
money truly belongs to Harris under federal law, the officials may not turn it over
to the state treasury.

In addition, we are satisfied that the named officials have the authority to
comply with federal law here. Defendant Owens wields the "supreme executive
power of the state" and is charged with "tak[ing] care that the laws be faithfully
executed." Colo. Const. art. IV, § 2. Defendant Rizzuto is charged with
administering Colorado's Medicaid law, the Colorado Medical Assistance Act.
See Colo. Rev. Stat. § 25.5-1-201(1)(c). As such, he appears to be
empowered to
take actions necessary to comply with federal Medicaid requirements. See Colo.
Rev. Stat. § 26-4-105. Defendants can be enjoined to prevent the state from
appropriating funds that belong to Harris or other Medicaid recipients.

2. Prospective Relief

As noted above, Harris seeks declaratory and injunctive relief. This suit is
not prospective merely because the requested relief is framed in equitable terms
rather than as a request for damages. SeeANR Pipeline, 150 F.3d at 1189
(citing
Edelman v. Jordan, 415 U.S. 651, 668 (1974)). Nor is it dispositive that the
requested relief is likely to burden the state's treasury to some degree. Elephant
Butte, 160 F.3d at 611. "The overriding question is not whether the relief will
require the payment of state funds, but whether the relief will remedy future
rather than past wrongs." Id. (quotation marks omitted); cf.Nelson v.
Miller, 170
F.3d 641, 646 (6th Cir. 1999) ("Whether a suit against State officials in their
official capacity is deemed to be against the State depends on whether the
plaintiff seeks 'retroactive' or 'prospective' relief."). Although the Eleventh
Amendment bars compensatory relief for past injuries, "relief that serves directly
to bring about an end to a present violation of federal law is not barred by the
Eleventh Amendment even though accompanied by a substantial ancillary effect
on the state treasury." Papasan v. Allain, 478 U.S. 265, 278 (1986).

Applying these principles, we conclude that at least part of Harris's suit is
not barred by the Eleventh Amendment.(4)
Most of the tobacco settlement funds
due to Colorado have not yet been paid. Harris asserts that some of these funds
belong to him under 42 U.S.C. § 1396k(b) and seeks to prevent the state from
depositing his portion into the state treasury. The alleged violation of federal law
here is the appropriation that has yet to take place. Thus, with respect to these
funds, Harris is seeking prospective relief from an ongoing violation. As such,
his claim appears to fall within the ambit of Ex parte Young.

We disagree with those district courts that have found it "wholly irrelevant
that payments [under the Master Settlement Agreement] will be made in fixed
future installments rather than a lump sum." Floyd v. Thompson, 111 F. Supp.
2d 1097, 1100 (W.D. Wis. 1999), aff'd on other grounds, 227 F.3d 1029 (7th Cir.
2000); accordMartin v. New Mexico, 197 F.R.D. 694, 696 (D.N.M. 2000);
Barton v. Summers, 111 F. Supp. 2d 989, 991-92 (M.D. Tenn. 2000); cf.Strawser v. Lawton, 126 F. Supp. 2d 994, 1003 n.6 (S.D. W. Va. 2001)
("Plaintiffs' proposed result . . . would permit, by analogy, any seeker of state
funds to look for accounts receivable of the State and then attempt to garnish
them before their purely ministerial transmission to the treasury.").(5) From a
purely economic perspective, it may be irrelevant that the settlement funds are to
be paid over time rather than all at once; the future amount can be reduced to a
present value. For the purposes of the Eleventh Amendment, however, the
difference is highly relevant. In Elephant Butte, we held that the Eleventh
Amendment did not bar a suit seeking an injunction reforming a contract to
prevent the state from taking the profits of a lease: "[B]ecause the lease
agreement allegedly conflicted with federal law at its inception, the state
officials' acts of signing the lease and subsequently accepting benefits under the
assignment provision may constitute an ongoing violation of federal law." 160
F.3d at 609-10. Similarly, in Johns v. Stewart, 57 F.3d 1544, 1553-55 (10th Cir.
1995), we held that the plaintiffs could not seek retroactive monetary
reimbursement for federal Supplemental Security Income benefits that had been
withheld by the state, but could seek prospective injunctive relief against future
withholdings.

As in Elephant Butte and Johns, in this case the state officials'
acceptance
of the settlement funds solely for the state may constitute an ongoing violation of
federal law. With respect to funds that have not been received, the officials have
not yet violated federal law. The alleged harm to Harris is entirely in the future.
The relief he seeks is therefore prospective in character and addressed to an
ongoing violation of federal law.(6)

Defendants seek to analogize this case to Papasan v. Allain, 478 U.S. 265
(1986), but the foregoing discussion shows why that case is readily
distinguishable. In Papasan, the Supreme Court held that the Eleventh
Amendment barred a suit seeking declaratory and injunctive relief for breach of
trust against state officials whose alleged mismanagement of school trust lands in
the 1850s had led to significantly lower funding for certain school districts. Id.
at 274-75. At the same time, however, the Court held that the Eleventh
Amendment did not bar an equal protection claim challenging the disparity in
school funding, because this claim sought relief from an alleged ongoing
constitutional violation. Id. at 282. The claims barred in Papasan concerned
alleged violations of federal law that were wholly in the past; for these, the
courts could not provide relief even if styled as "prospective." In this case, as
explained above, the alleged violation of federal law is ongoing. Harris's
requested relief would "serve[] directly to bring an end to a present violation of
federal law"; any effect it would have on Colorado's state treasury would be
purely "ancillary" to the state's compliance with federal law. Id. at 278.

In sum, Harris seeks prospective relief for an alleged ongoing violation of
federal law. While this suit, if successful, might deprive the state of future
funds, that effect would be ancillary to compliance with federal law, not
compensatory for past injuries.

3. Special Sovereignty Interests

The courts may not award relief against the state that "implicates special
sovereignty interests" and is the "functional equivalent" of relief that would
otherwise be barred by the Eleventh Amendment. ANR Pipeline, 150 F.3d at
1190. For example, the Eleventh Amendment bars a suit against a state that
would divest it of sovereign control over some submerged lands because
historically, "these lands are tied in a unique way to sovereignty." Idaho v.
Coeur d'Alene Tribe, 521 U.S. 261, 286-87 (1997). It also bars a suit seeking an
injunction against a state property-tax system because "it is impossible to imagine
that a state government could continue to exist without the power to tax." ANR
Pipeline, 150 F.3d at 1193. On the other hand, the Eleventh Amendment does
not "extend to every situation where a state property interest is at issue"; Coeur
d'Alene represents an "extreme and unusual case." Elephant Butte, 160 F.3d at
612; cf.Coeur d'Alene, 521 U.S. at 287 (referring to the "particular and special
circumstances" of the case).

Defendants and Amici argue that the relief Harris seeks implicates four
special sovereignty interests: the state's interest in (1) "mak[ing] determinations
about the nature and extent of its various educational and social services
programs"; (2) "its revenue regardless of its source"; (3) "its appropriation
prerogatives"; and (4) "its authority to fashion an appropriate remedy in law
enforcement actions." None of these qualifies as a special sovereignty interest in
this case.

The first two asserted interests can be dismissed straightforwardly on the
basis of our precedent. First, the state has no special sovereign interest in
ordinary aspects of its social programs, because "most government policies do
not affect core aspects of a state's sovereignty." Buchwald v. Univ. of N.M. Sch.
of Med., 159 F.3d 487, 495 n.6 (10th Cir. 1998); cf.Branson Sch. Dist. RE-82
v.
Romer, 161 F.3d 619, 632 (10th Cir. 1998) (holding that the state has no special
sovereign interest in managing lands held in trust). More to the point, a "state's
interest in administering a welfare program at least partially funded by the federal
government is not such a core sovereign interest as to preclude the application of
Ex parte Young." J.B. v. Valdez, 186 F.3d 1280, 1287 (10th Cir. 1999).
Second,
the state has no special sovereign interest in future sources of revenue. SeeElephant Butte, 160 F.3d at 612.

The third and fourth asserted interests may be more plausible in the
abstract, but neither is sufficiently implicated by Harris's lawsuit to merit
extensive discussion. Whatever the state's interest in its appropriations
prerogatives, the relief Harris requests will not "impermissibly intrude upon the
state's dignity and status as a sovereign government." Elephant Butte, 160 F.3d
at 613 (quotation marks omitted). Contrary to Defendants' apparent belief,
Harris is not asking the legislature to pass an appropriations bill giving him
money from the state treasury. Rather, he seeks to prevent Defendants from
turning the tobacco settlement funds over to the treasury before he and the other
smokers receive their portion. The state's interest with respect to these future
funds is not related to appropriations but to revenue sources, an interest we have
rejected as sufficiently special to serve as an exception to Ex parte Young. SeeElephant Butte, 160 F.3d at 612.

Similarly, even assuming the state has a special sovereignty interest in
shaping law-enforcement remedies, Harris's suit does not impermissibly intrude
on this interest. Harris would not require the state to demand more or less money
in its settlement with the tobacco companies, for example. The state and the
tobacco companies have already determined how much money will be paid to the
state; Harris merely seeks his portion (if any) of these funds. In that regard,
Harris's claim is more analogous to the revenue interest we have already rejected.

In sum, "we cannot say the relief [Plaintiffs] request is as far-reaching or
intrusive as that sought in Coeur d'Alene Tribe and ANR Pipeline."
Elephant
Butte, 160 F.3d at 612. As in Elephant Butte, "the remedy in this case only
presents the possibility of a readjustment of priorities for the distribution of
profits from," in this case, certain settlement funds. Id. at 612-13. It will have
"minimal effect on the sovereignty and autonomy" of Colorado, particularly since
the "interest[s] of vindicating the federal rights and answering the federal
questions involved substantially outweigh the state's sovereign interests." Id. at
613.

4. Conclusion

Harris seeks prospective relief for Defendants' alleged ongoing violation
of federal law. This relief does not implicate the state's special sovereignty
interests. We thus conclude that his suit is not barred by the Eleventh
Amendment. Because we have subject-matter jurisdiction over this case, we turn
now to its merits.

D. Section 1396b(d)(3)(B)(ii)

The premise of Harris's lawsuit is that at least some of the settlement funds
are subject to the requirement of 42 U.S.C. § 1396k(b), which states that after the
state and federal governments are reimbursed for their Medicaid costs, any
remainder goes to the recipients.(7)
However, Congress rejected Harris's premise
in a rider to the Emergency Supplemental Appropriations Act, Pub. L. No. 106-31, 113 Stat. 57,
103-04 (1999), which added this provision to the Medicaid act:

Except as provided in subsection (i)(19) [which prevents
federal funding for the states' administrative costs of tobacco
litigation], a State may use amounts recovered or paid to the State as
part of a comprehensive or individual settlement, or a judgment,
described in clause (i) [which specifically names the 1998 Master
Settlement Agreement] for any expenditures determined appropriate
by the State.

42 U.S.C. § 1396b(d)(3)(B)(ii). Less central to this case, clause (i) specifically
exempted the settlement funds from the requirement that the federal government
be reimbursed for its pro rata share of Medicaid costs. These provisions apply to
"amounts paid to a State prior to, on, or after the date of the enactment of this
Act." Emergency Supplemental Appropriations Act, tit. III, § 3031(c), 113 Stat.
at 104.

Clause (ii) appears to have been added by the Senate Appropriations
Committee during its markup of the legislation. After considerable floor debate,
the Senate defeated a competing amendment offered by Senators Specter, Harkin,
Jeffords, and Kennedy that would have required the states to spend part of the
settlement on tobacco and health programs rather than remitting it to the federal
government. See generally 145 Cong. Rec. at S2828-36 (daily ed. Mar. 17,
1999); id. at S2881-97 (daily ed. Mar. 18, 1999). Much of this debate centered
on whether the tobacco settlement funds were a Medicaid settlement, to which
the federal government would be entitled to a share. Compare 145 Cong. Rec. at
S2885 (daily ed. Mar. 18, 1999) (statement of Sen. Gorton) (stating that the
Specter Amendment "makes an assumption, an unwarranted assumption, that
these were Medicaid claims that were presented by the States"), andid. at
S2887
(statement of Sen. Graham) (arguing that the Medicaid statute "is inapplicable to
the tobacco litigation"), withid. at S2829 (daily ed. Mar. 17, 1999) (statement
of
Sen. Specter) (recognizing that the federal government has a "very strong claim"
to a portion of the settlement under Medicaid law), id. at S2885 (daily ed. Mar.
18, 1999) (statement of Sen. Harkin) (stating that the settlement "also includes
the Federal share of Medicaid"), id. at S2891 (statement of Sen. Murray) (same),
andid. at S2896 (statement of Sen. Kennedy) (same). Proponents of the
Specter
Amendment argued, in essence, that some portion of the settlement funds
belonged to the federal government; therefore, it was appropriate for Congress to
direct how this portion should be spent in exchange for waiving federal
recoupment. The final vote was 71 to 29 against the Specter amendment. Id. at
S2897.

Senators on both sides of the issue recognized the uncertainty about the
legal status of the settlement funds and the desirability of congressional
resolution in some manner. See, e.g., 145 Cong. Rec. at S2829 (daily ed. Mar.
17, 1999) (statement of Sen. Specter) ("If this legislation is not enacted, it is
possible that there could be very bitter, protracted, and expensive litigation, with
the Federal Government asserting its claim under existing law . . . . [State
officials] and I agreed that we ought to try to resolve the matter so they would
know what is going to happen and their planning would be firm."); id. at S2832
(statement of Sen. Sessions) ("At this point, the Federal Government may or may
not have a claim upon that money."). In the Conference Report, the committee
recognized that uncertainty over the distribution of the funds would create
"litigation over the next several years, delaying the availability of these funds and
putting planned State uses on hold" and therefore adopted the provision "in order
to permit States which are delaying their plans for the use of these funds the
certainty they need to plan their initiatives." H.R. Conf. Rep. No. 106-143, at 99
(1999).

Clause (ii) releases the tobacco settlement funds recovered by the state
from any claims Harris had to receive any of this money under federal law. A
contrary reading would negate the mandate that all money "recovered" by or
"paid" to the state could be used "for any expenditures" it desired. AccordStrawser, 126 F. Supp. 2d at 1000. Harris nevertheless presents five reasons that
we should read clause (ii) more narrowly, as exempting the state from
reimbursing only the federal government: (1) Clause (ii) does not define what
funds have been "recovered" by the state; (2) clause (i)'s express exemption of
the settlement from federal reimbursement implies that the settlement payments
are not similarly exempt from individual reimbursement; (3) a narrow reading is
necessary to avoid a disfavored repeal-by-implication; (4) application in this case
raises retroactivity concerns; and (5) the legislative history supports a narrower
reading. While these arguments have some force, none persuade us to abandon a
plain reading of the text.

1. Amounts Recovered or Paid to the State

Harris argues that it "begs the question" to assume that the entire amount
of the tobacco settlement constitutes "amounts recovered or paid to the State"
within the meaning of § 1396b(d)(3)(B)(ii); rather, he asserts, the states are
entitled only to their "lawfully acquired portion." All of the settlement funds go
to the state, however; in plain English, the state has "recovered" or "been paid"
funds, even if those funds are in turn owed to a third party. Thus, when
§ 1396b(d)(3)(B)(ii) refers to money "recovered or paid to the State," it is
referring to any money that goes to the state under the tobacco settlement
agreement.

2. Expressio Unius

Harris invokes the canon of construction that expressio unius est exclusio
alterius ­ the expression of one thing is the exclusion of another. Because the
statute expressly exempts the settlement funds from the requirement that the
federal government be reimbursed under the Medicaid laws, he argues, we should
not read it impliedly to exempt the funds also from the requirement that
individuals be reimbursed. The strength of this canon, however, varies by
context. See, e.g., In re Sealed Case, 181 F.3d 128, 132 (D.C. Cir. 1999) (en
banc) ("The legal maxim expressio unius est exlusio alterius . . . is not always
correct. Rather, . . . the maxim's force in particular situations depends entirely on
context, whether the draftsmen's mention of one thing . . . does really
necessarily, or at least reasonably, imply the preclusion of alternatives."
(quotation marks and alterations omitted)); In re Continental Cas. Co., 29 F.3d
292, 294 (7th Cir. 1994) ("We are skeptical of this maxim, for the omission of
other items from a list may reflect no more than a belief that other options are
provided for elsewhere."). We do not find it compelling to apply the canon as
Harris wishes in this case. Harris would have us read clause (ii) as simply
reiterating clause (i). We think it is more faithful to Congress's intent to read
clause (i) as addressing a specific issue with which Congress was concerned,
while clause (ii) was a more general exclusion to preclude other claims similar to
those asserted by Harris from tying up these settlement funds.

3. Repeal by Implication

Harris argues that reading § 1396b(d)(3)(B)(ii) to exempt the settlement
funds from § 1396k(b) would violate the canon of construction that "repeals by
implication are not favored." United States v. United Continental Tuna Corp.,
425 U.S. 164, 168 (1976). However, this rule of construction, like others, has to
be applied with common sense and appreciation for context. Here, it appears
that the new statute is simply a preemptive congressional resolution of a discrete
controversy that arose long after the original § 1396k(b) was enacted. The later
statute simply addresses one particular application and carves out an exception.
We see no repeal-by-implication problem. See alsoStrawser, 126 F. Supp. 2d
at
1000 n.4.

4. Retroactivity

Harris asserts that applying § 1396b(d)(3)(B)(ii) in this case raises "serious
retroactivity problems." It is unclear what he means by this. Deciding whether a
statute should operate retroactively is primarily a question of discerning
congressional intent. Jurado-Gutierrez v. Greene, 190 F.3d 1135, 1148 (10th Cir.
1999) cert. denied, Palaganas-Suarez v. Greene, 529 U.S. 1041 (2000). Here,
as
noted above, the statute clearly applies to all funds received under the Master
Settlement Agreement, whether past, present, or future. Thus, it is clear that
Congress intended for the section to apply retroactively.

Harris might be arguing that applying this section retroactively raises due
process questions. With respect to economic legislation, the Due Process Clause
requires that retroactivity must further a legitimate legislative purpose through
rational means. General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992).
Here, the provision eliminated uncertainty over ownership of the funds, thereby
freeing the states to use such funds immediately as received. This is sufficient to
meet the rational-basis test. AccordStrawser, 126 F. Supp. 2d, at 1002 n.5.
There is no retroactivity problem.

5. Legislative History

Harris argues that the legislative history supports reading
§ 1396b(d)(3)(B)(ii) as dealing only with reimbursements to the federal
government. "Where the language of the statute is plain, it is improper for this
Court to consult legislative history in determining congressional intent." N.M.
Cattle Growers Ass'n v. United States Fish & Wildlife Serv., 248 F.3d 1277,
1282 (10th Cir. 2001). As noted above, we find the language of clause (ii) to be
plain. It states that a "State may use amounts recovered or paid to the State as
part of a comprehensive or individual settlement . . . for any expenditures
determined appropriate by the State." § 1396b(d)(3)(B)(ii) (emphasis added).
We find nothing ambiguous in that language.

In any event, if we were to consult legislative history, we find nothing that
would lead us to Harris's interpretation of this statute. Indeed, we have found
nothing that indicates Congress considered individual claims at all. Thus, the
reference to legislative history is unhelpful.

CONCLUSION

Harris's lawsuit is not barred by the Eleventh Amendment, because it seeks
prospective relief for Defendants' ongoing alleged violation of federal law and
the requested relief does not implicate any special sovereignty interests. On the
merits, however, we AFFIRM the district court's dismissal for failure to state a
claim upon which relief can be granted, because, pursuant to
§ 1396b(d)(3)(B)(ii), funds received under the Master Settlement Agreement are
not subject to the distribution requirements of § 1396k(b).

FOOTNOTESClick footnote number to return to corresponding location in the text.

*. The Honorable Richard Owen, United States
District Judge for the
Southern District of New York, sitting by designation.

1.Harris filed this lawsuit as a class action on
behalf of all those who have
had treatments for smoking-related illnesses paid for by Colorado's Medicaid
program "whose claims [for medical expenses] were released by the State of
Colorado in the Master Settlement Agreement." Because the district court did not
rule on class certification, we refer to the plaintiff as "Harris."

2.Harris conceded that the settlement "does
not specify what portion of the
payments to the State of Colorado will be attributable to tobacco related
Medicaid costs," and the Seventh Circuit has noted the "nightmarish"
administrative problems involved in sorting out the Medicaid share. Floyd v.
Thompson, 227 F.3d 1029, 1038 (7th Cir. 2000). Harris's complaint seeks
payment for (1) all smoking-related medical expenses not covered by Medicaid;
(2) the difference between the reasonable value of medical treatments he had
received and the amount paid by Medicaid; and (3) the value of future needed
medical treatments. This formula seems to assume that the state settled his claims
at their full value.

3.For the purposes of this case, we assume
that § 1983 provides a cause of
action for violations of the Medicaid provisions at issue here. Amici argue
briefly to the contrary. Both the Supreme Court and this court, however, have
found that § 1983 creates a private cause of action to enforce other provisions of
the federal Medicaid laws. E.g., Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 512
(1990) (discussing § 1396a(a)(13)(A)); Amisub (PSL) v. Colo. Dep't of Soc.
Servs., 879 F.2d 789, 793 (10th Cir. 1989) (same); cf.Colo. Health Care Ass'n
v.
Colo. Dep't of Soc. Servs., 842 F.2d 1158, 1164 n.5 (10th Cir. 1988) (citing
federal appellate cases permitting private causes of action under the Medicaid
laws). But cf.Suter v. Artist M., 503 U.S. 347, 359 (1992) (suggesting
in a non-Medicaid case that Wilder might be limited to the particular provision at
issue in
that case). In any event, absent "exceptional circumstances," we do not ordinarily
consider issues raised only in an amicus brief. Wyo. Farm Bureau Fed'n v.
Babbitt, 199 F.3d 1224, 1230 n.2 (10th Cir. 2000). Although we generally do not
accept a party's legal concession on a jurisdiction issue, the statutory issue is not
itself jurisdictional. Moreover, because Eleventh Amendment immunity is subject
to waiver by Defendants, we would not be precluded from accepting their
concession in any event. Cf.United States ex rel. Long v. SCS Bus. &
Technical
Inst., 173 F.3d 890, 892-93 (D.C. Cir. 1999) (suggesting that a court may accept a
state's invitation to decide the merits first).

4.It is arguable that Harris may not recover
tobacco funds that have already
been deposited in the state treasury and appropriated for other uses. It is unclear
from the record how much money (if any) the state has actually received to date.
With respect to these funds, the alleged violation may be the wrongful
appropriation of money that belonged to Harris. This action would be wholly in
the past, and ordering Defendants to pay Harris for that past conduct would likely
be considered "the practical equivalent of money damages." ANR Pipeline, 150
F.3d at 1189; cf.Johns v. Stewart, 57 F.3d 1544, 1554-55 (10th Cir. 1995)
(holding that a suit seeking to recover withheld social-security benefits was
barred as to past withholdings but could proceed as to future withholdings). We
need not resolve this issue definitively, however; it is clear that most of Harris's
suit is not barred by the Eleventh Amendment, and we ultimately reject it on the
merits.

5.We do not agree with the Strawser
court's concern on this issue. Our
decision would allow a plaintiff to claim the state's accounts receivable only if
under federal law those accounts themselves belonged to the plaintiff. That does
not imply that a plaintiff could garnish unrelated funds. We express no opinion
on this broader question.

6.Indeed, it is not clear that the state has yet
received full reimbursement for
its Medicaid payments, in which case Harris's claim would relate only to some
future receipt of funds by the state.

7.We assume, without deciding, that a
portion of the claims settled in the
Master Settlement Agreement were for Medicaid claims, because the settlement
agreement explicitly included health-related claims and Colorado's complaint
sought damages that included amounts for "increased Medicaid payments." But
seeWatson, -- F.3d at -- (*5) (holding that Texas did not settle individual
Medicaid claims).